TMI Blog2018 (4) TMI 989X X X X Extracts X X X X X X X X Extracts X X X X ..... of the payment in the hands of the payer where the payee is either a resident or a non-resident. That object would gel defeated as a result of the discrimination brought about qua non-resident by requiring the tax to be deducted at source while making payment of fees for technical services in terms of section 40(a)(i) of the Act - decided in favour of assessee - I.T.A. Nos. 742 And 743/Mum/2016 - - - Dated:- 10-4-2018 - SHRI SHAMIM YAHYA, AM AND SHRI RAVISH SOOD, JM For The Appellant : Shri Nitesh Joshi And Ms. Neha Vikram For The Respondent : Shri M. V. Rajguru ORDER Per Bench : These are appeals by the assessee against the respective orders of the ld. Commissioner of Income Tax (Appeals). Since the iss ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e assessee should have deducted tax at source and nonpayment thereof renders the same payment not allowable u/s. 40(a)(ia) of the Act. For the assessment year 2006-07, the ld. Commissioner of Income Tax (Appeals) held as under: In the present facts of the case, it is seen that the issue has already been a matter of adjudication as to whether the management charges received by Lloyds Register UK are to be treated as taxable in India. My predecessor in his order in the case of Uoyds Register for AY 2006-07 vide order CIT(A}~ ll/IT/Rg.4(l)/09-10/301-L dated 21.02.2011, for detailed reasons given therein, has held that 50% of the management charges would be held as taxable in India, if this be the position then it flows from this that the ap ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ndisputed and are identical. The tribunal had decided the issue in favour of the assessee by following the judgment of Hon ble Delhi High Court in the case of Herbalifc International India P.Ltd. (384 ITR 276). We may gainfully refer to the order of the Tribunal on this issue as under: 6. Next effective ground of appeal(GOA -3 4) is about application of section 40(a)(ia) of the Act to management charges. During the assessment proceedings, the AO held that the assessee had to deduct tax at source on all the payments unless he had approached the AO and had obtained certificates for NIL TDS. The FAA dismissed the appeal filed by the assessee in that regard. 6.1 Before us, the DR supported the order of the AO .The AR contended that the Ho ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... l 1, 2005. Section 40(a)(i) of the Act in providing for disallowance of a payment made to a non-resident if tax is not deducted at source, is no doubt meant to be a deterrent in order to compel the resident payer to deduct tax a! source while making the payment. However, that does not answer the requirement of article 26(3) of the DTAA that the payment to both residents and non-residents should be under the same conditions not only as regards deduction of tax at source but even as regards the allowability of such payment as deduction. It has to be seen that in those same conditions1' whether tin- consequences are different for the failure to deduct tax at source. The expression under the same conditions in article 26(3) of the DTAA ..... X X X X Extracts X X X X X X X X Extracts X X X X
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